Lessons From the Dot-Com Bubble

2/21/2013 11:23AM

The 13th anniversary of the bursting of the Internet bubble will be "celebrated," ironically enough, on almost the same day as the bull market's fourth birthday. Mark Hulbert joins Markets Hub. Photo: AP.

This transcript has been automatically generated and may not be 100% accurate.

... I ... well now I'm really hoping to invest in this company spokesman EPD well ... the surprise use the ... for ... instance ... I ... the ... offence dot com of course you remember that anything illustrated the dot com mania in the crash he was that the company in that little slot puppy mill was all over the place ... thirteen years ago that were talking about but some of them have an anniversary ... notable market with ... some of the thirteen year bursting of the Nasdaq dot com bubble of Mark Hulbert for MarketWatch ... the lessons we can draw from it ... you know early on to talk about this anniversary didn't mark ... that's right it is as I mentioned our anniversary of my mind that the entire metaphor for the mobile market and of course that is something to celebrate but ... a far bigger story I think is the one that no one's looking at which is as you say the thirteenth ... anniversary ... of the quads of the ... bursting of the internet all the Nasdaq Composite to spread the ... word of an art that most reflects that ... is still one two thousand points below the high it hit ... almost thirty years ... at broadly about forty percent ... of its forty percent all ... of that high ... which is in your palm as you point out that when he started including dividends inflation you just roll those things ... this is probably the worst stock collapsed or were stock market index collapsed right ... what a rand native really industries credulity to most investors and so they actually start slicing it doesn't do that ... turns out that ... it is a is a far worse than for example the great depression ... what people don't realize is that the Dell even though it didn't get to twenty five years for it to get back to its previous level ... reflects a personally thirty stocks if you read the entire market PT dividends and inflation into account ... the it took about seven years or so seventy eight years for you to get back to where was ... at the crash of the pre crash on August nineteen twenty nine oh that's nothing ... to say that it's better for a lot better than we thought about the Nasdaq here we are thirty years later were still forty percent on ... year in ... March fell to about thirteen years discernible this photo ritual I need ... to remember that God had stock on and that's ... what what lessons can we draw from this is a pretty good time to start on him ... when these anniversaries what lessons can we draw from this ... crowd contract the most important when Tuesday diversification is seen as one of those lessons that we all acknowledge and give it service didn't go on an error rate ... RHI MAN has an answer that stock but ... it turns out that it was a very broadly diversified benchmark ... then they recover much more quickly from bear market lows and this is this isn't the right to things I think the lesson of the Nasdaq ... Composite and Internet protocol was that if you were to investing in that or any other sector for the first that's the one were focusing on here ... you're far too focused in just a couple stocks like Cisco that completely dominated the index ... that the in the top of the bubble back thirty years ago ... and that is perhaps the reason why it's taken so long even Japan action when a column of these two in ... one way of looking at the data ... was able to recover more quickly from the crash of nineteen eighty nine to the nominees ... then the Nasdaq and so ... on this is the isthe is breaking a precedent in history or is a well ... it was such a narrowly defined sector ... then we can really say that this is a true of the overall lineup bear market history and I I guess I attended the latter question it's a low point of not thinking ... we can have it we should say that there were considerably longer than it ever has to do this ... we need to be the person ... Brian and I mean that that that the livestock seen them do that again leads the way sway it was most of the tech stocks are driving that ... well that's right a person of the modern day analogy is how much Apple was dominating the index last year her first ... as they did media rejigger the index Frederick do some of them with a date ... with people you know when they invest in the in the queues their ... investing not thousands of companies ... really aren't hundred companies that are part of a kid the yet the Nasdaq one hundred ... but they they are really ... moreover it isn't the public know that that awful stuff ... the lesson that I let's not draw is that ... next time someone tries to take your money but telling you that were new paradigm in earnings don't matter ... one ... one from the first and do not listen ... get a ... better grade in the night ... higher mark over thank very much ... read the whole